8-1

Chapter 8, TEST 8A

Name ______

Date ______

SCORING RECORD

Section / Total Possible / Deductions / Student
Score
A / 30
B / 30
C / 10
D / 30
Total / 100

Section A

DIRECTIONS: Each of the following statements is true or false. Indicate your choice by writing in the Answers column T for a true answer or F for a false answer. (2 points for each correct answer)

For

Answers Scoring

  1. Payroll expenditures represent a small part of

the total expenditures of most companies. ______

  1. Federal, state, and local laws require employers

to maintain detailed and accurate payroll

accounting records. ______

  1. An employer works under the control and direction

of an employee. ______

  1. An example of a voluntary deduction is union dues. ______
  2. The Fair Labor Standards Act provides that all

employees covered by the act must be paid double

the regular rate for all hours worked over

40 hours in a week. ______

  1. An employee's total earnings before deductions

is called gross pay. ______

  1. The tax rates and the maximum amounts of earnings

subject to FICA taxes have been changed

frequently by Congress. ______

  1. Under federal law, employers are required to

withhold a percentage of the employee's wages

for Social Security and Medicare. ______

  1. Employers may use the wage-bracket method to

determine the amount of federal income tax to be

withheld from an employee's pay. ______

  1. FICA taxes include amounts for Social Security

and Federal Income Tax. ______

  1. The employee's earnings record is a summary of

the earnings of all employees for each pay period. ______

  1. The payroll register is a form used to assemble

data required at the end of each payroll period. ______

  1. The journal entry to record payroll for the

accounting period includes a debit to Wages

and Salaries Expense for the net pay. ______

  1. Electronic payroll systems are more efficient than

manual systems. ______

  1. When a direct deposit is made by the employer

to the employee's bank, the employee does not

handle the paycheck. ______

Section B

Directions: Complete each of the following statements by writing in the Answers column the letter of the word or words that correctly completes each statement. (3 points each)

For

Answers Scoring

  1. Any person who agrees to perform a service for

a fee and is not subject to the control of those

for who the service is performed is called a(n):

(A)manager; (B) employee; (C) independent

contractor; (D) executive; (E) none of these. ______

  1. An employee's earnings for a payroll period can

be based on: (A) the time worked; (B) units of

output; (C) sales volume; (D) A and C only;

(E) A, B, and C. ______

  1. Trevor Jones receives a regular salary of $800

a week and is entitled to overtime pay at the

rate of one and one-half times the regular hourly

rate for any time worked in excess of 40 hours

per week. Taylor's overtime hourly pay rate is:

(A)$41.54; (B) $45.00; (C) $27.69; (D) $30;

(E) $13.85. ______

  1. Ken Madison is paid one and one-half times

the regular hourly rate for all hours worked

in excess of 40 per week and double time for work

on Sunday. Ken's regular rate is $10 per hour.

During the week ended April 11, he worked 12 hours

each day from Monday through Friday, 8 hours on

Saturday, and 4 hours on Sunday. His total

earnings for the week, including overtime, is:

(A)$720; (B) $750; (C) $880; (D) $900;

(E) $1,040. ______

  1. Federal income tax that is withheld each pay

period from the employee's earnings is based on all

of the following except: (A) earnings of the

employee; (B) employee’s age; (C) number of

withholding allowances; (D)length of the pay

period; (E) marital status. ______

  1. Year to date earnings for Bob are $72,400. The

maximum earnings for Social Security is $76,200.

Current period earnings are $8,000. The amount of

current earnings subject to Social Security is:

(A) $8,000; (B) $3,800; (C) $4,200; (D) $72,400;

(E) none of these. ______

  1. A form used to assemble earnings, taxable

earnings, deductions, and net pay at the end of

each payroll period is a(n): (A) payroll

check; (B) employee's earnings record;

(C)payroll ledger; (D) payroll register;

(E) payroll card. ______

  1. The account that is credited for the Social

Security tax withheld from the employee's

earnings is: (A) Social Security Tax Expense;

(B)Social Security Tax Payable; (C)Payroll Taxes

Expense; (D) Payroll Expense; (E) Federal Tax

Expense. ______

  1. The payroll register for the week ended March 31,

for Finan's Typing Service indicates gross

payroll of $12,000 and payroll deductions of $2,000.

The journal entry for the payroll for this week

would include the following credit to cash:

(A)$12,000; (B) $14,000; (C) $10,000; (D) $2,000;

(E) none of these. ______

  1. Social Security Tax Payable and Medicare Tax

Payable are classified as: (A) owner’s equity;

(B)assets; (C) liabilities; (D) expenses;

(E) government costs. ______

Section C

DIRECTIONS: Match the correct answer to the definition that best explains it. (2 points each)

_____ 1. The employee does not handle the paycheck; payment is made

by the employer directly to the employee's bank.

_____ 2. Compensation for skilled or unskilled labor.

_____ 3. Compensation for managerial or administrative services.

_____ 4. A computer system based on a software package that performs

all payroll record keeping and prepares payroll checks.

_____ 5. Payroll system in which all records are prepared by hand.

  1. manual system
  2. electronic system
  3. wages
  4. salary
  5. direct deposit

Section D

DIRECTIONS: Tobi's Tax Service has four employees who are paid on a weekly basis, receiving time and one-half for working more than 40 hours in one week. The payroll data for the week ended May 31 is as follows. Complete the payroll register. (30 points total)


The cumulative earnings shown above are for the year through last week. Social Security tax is withheld at 6.2% and Medicare tax at 1.45%. Each employee who is married has $45 withheld for health insurance, and each employee who is single has $15 withheld. Jackson has $10

deducted each pay period for U.S. Savings Bonds. Unemployment taxes are paid on a maximum of $7,000 of earnings and the taxable amount has been entered for you. Number the checks beginning with 602.

Total and verify the columns.